Construction

Banks still failing construction

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That is in response to the Federation of Master Builders (FMB), which has found that one in four of its members has missed out on contracts because they can’t secure funding.

The latest figures for the ‘funding for lending’ scheme show that lending fell significantly within the last three months of 2012.

More than 40% of construction SMEs surveyed said they’d found it harder to realize access to finance beforehand two years, while 43% reported that credit is dearer than two years ago and 25% faced increased charges for credit facilities.

The FMB said that its survey confirmed its fears that “banks are actively discriminating against construction firms”. 25% of respondents reported they’d lost work thus, and 16% said that they had been refused requests for credit by a bank that had previously considered them trustworthy – explicitly because they work within the construction industry.

 Of those surveyed, 1 / 4 reported that they had lost business or needed to abandon plans for growth or investment because they were unable to elevate the required funds, and 18% said that the selection of staff they were ready to employ had fallen as an immediate result.

The FMB has now written to business minister Michael Fallon – whose portfolio includes construction – asking him to intervene and feature a word with the banks.

FMB chief executive Brian Berry said: “What we’re seeing is that otherwise viable and successful firms cannot access suitable finance for business operations, including buying new equipment and plant. Here is having a significant knock-on effect on jobs and growth inside the sector.

“The fall in net lending by banks under the government’s funding for lending scheme comes as no surprise. SMEs and the development industry are continually touted because the drivers of monetary recovery but, without access to finance, the arena will continue to say no.”

He added: “The government must prevail upon banks to not discriminate against viable and successful firms simply because they work within the construction industry. If the funding for lending figures don’t improve significantly within the first quarter of 2013, the govt. must urgently explore alternative vehicles to enhance the flow of finance to construction SMEs.”